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Colombia opens its energy sector to China

Beijing – Colombia has invited Chinese companies to bid for oil and gas exploration projects on its territory and thus help the South American country boost its output by half in six years, Colombian Minister of Mines and Energy Hernan Martinez told the South China Morning Post. In a recent trip to Beijing, he had already “pre-announced" that his country would open 170 exploration areas for bidding on December 2.

The minister also said that he spoke with officials from the China National Petroleum Corp, China Petrochemical Corp and Sinochem. “We aim to award exploration rights by the middle of next year,” Martinez said.

Energy-rich Colombia is South America's fourth-largest oil producer and its output is expected to reach close to 700,000 barrels of oil a day this year, up from 618,000 last year. However, this is still a drop compared to daily output in 1999, which peaked at 838,000 barrels.

According to Minister Martinez, years of clashes with rebels are to blame for interrupted exploration and efforts to arrest output declines. Growth slowly resumed in the last few years and should reach more than one million barrels by 2015.

“We are confident that this will be achievable based on the current information,” Martinez explained.

Most oil production is for export, the bulk going to the United States,since local consumption has been at most 240,000 barrels per day. However, the minister’s announcement suggests that China will be Colombia’s next growth market.

The China Petrochemical Corp is already active in the country. In 2006, it formed a joint venture with India's ONGC to acquire Colombian oil firm Omimex for US$ 800 million.

China’s move into Colombia follows a trend and is the latest step Beijing has taken in Latin America, where it has showered local governments with loans and investments, with energy and infrastructural development at the top of its list.

It is estimated that Colombia has 110 million to 115 million hectares of onshore and offshore areas with sedimentary formations that may have trapped oil and gas. Some 40 million to 45 million hectares of them are already undergoing exploration.

According to Martinez, China could play an important role in further developing them. However, he noted that a substantial part of the remaining regions is in the Amazon, whose environmental protection meant they were off limits to exploration.